EDITOR’S COMMENT We’ve got a story this week – on page 21 – which, if I’m honest, always makes me cringe a bit. But it is the type of story that always captures people’s eye and sparks a little debate.
It’s a look at chief executive pay across the built environment – or at least across the FTSE 100 and FTSE 250.
The numbers are always eye-opening and I am in no way saying that these guys (and they are mostly guys – although Lynda Shillaw’s appointment as chief executive of Harworth this week means we’ve now got two female CEOs of listed propcos) don’t deserve to get paid a lot. I know I wouldn’t want to do their jobs without a pretty hefty financial incentive.
But, I wonder if we might see some change to these figures going forward? Not just because of the impending recession, but because of this gradual but continual shift towards trying to make the world a more equal place.
Chief executive pay was collectively down by £23m in 2019, caused mostly by some big bonuses and incentives in 2018. But nine out of the top 10 highest paid propco chief executives still took home more than £1m.
SEGRO’s David Sleath’s 2019 remuneration topped £6.6m (he has overseen an almost 40% increase in share price since January 2019 though).
In the housebuilding sector, all but two of the top 10 chief executives took home more than £1m, with half earning more than £2m last year. Berkeley’s Rob Perrins topped the rankings with a £7.8m pay packet.
Many of those chief executives and their fellow board members have, in the early part of 2020, sacrificed elements of their salaries and bonuses, either diverting monies into charitable funds or keeping funds in the business in the hope that as the recession does come there will be less pressure to cut costs or make redundancies.
I wonder if those sacrifices – most of which were only for a period of three months – have left a lasting impact on any directors. Could we see executive pay flatline or decline in future years as leaders discover that sometimes what you have is enough?
Would we ever see in the real estate industry the likes of Dan Price, the boss of card payments company Gravity, who put himself and his entire staff on a minimum salary of $70,000 (£53,000)? It was a move in which he took a $1m pay cut but five years on he still thinks it’s the best thing he’s done, for him and for the business. He’s enabled his people to have children, buy houses, pay off debt. And he has grown his business at the same time.
FTSE 100 bosses earn about 117 times the salary of their average worker. Bosses definitely work harder, but do they work 117 times harder? It’s debatable isn’t it?
There are many things that we continue to learn through these strange, strange times, but it is purpose, people and how we live that continue to be the themes that crop up in the conversations I have.
So, while I think it is likely that I still may cringe at next year’s CEO pay packets report, I hope that the narrative that sits alongside it will talk more of how those that can are continuing to give back and increasingly providing more to those that have not. And how the self-imposed pay rises during lockdown may have given pause for thought, with the diverting of money into community projects being just the beginning of a new model.
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